Damage Caps Make It Too Cheap for Employers to Discriminate

Danya Davis and Bernessa Wilson were employees at an engineering firm in Illinois—both had worked at the firm for several years, with Davis serving in a vice president role and Wilson working as an administrative assistant. Throughout their employment, both Davis and Wilson were regularly subjected to sexual harassment, including derogatory slurs, lewd gestures, and sexist comments from their co-workers. Both Davis and Wilson reported these incidents to the firm’s leadership on numerous occasions, and no action was taken to address the conduct. Both were ultimately terminated.  

After Davis and Wilson sued their employer for sexual harassment under Title VII of the Civil Rights Act, a jury found in their favor and awarded them over $3 million each in damages in 2017. But in the end, a court reduced that amount to $50,000 each.  

Why? Title VII includes predetermined limits on how much money workers can recover as damages in employment discrimination cases, including cases of workplace harassment. These limits, also referred to as damage caps, are based solely on how many workers the company employs. Based on the size of their employer, federal law dictated that Davis and Wilson could only recover up to $50,000 each, no matter how much harm the employer caused or how much money the jury had awarded.  

The current limits on how much workers can recover vary based on the size of the employer. For all companies, even those with more than 500 employees, damages are capped at $300,000. So, for example, when a jury found that Omni Hotels, which has about 20,000 employees and recently announced a $1.5 billion reinvestment in its portfolio of properties, discriminated against an employee and awarded her over $25 million, Omni only had to pay $300,000 in damages. Recent polling makes clear that these damage caps run counter to how most people in the United States believe workers should be compensated when they win a discrimination case against their employer. 

80% of U.S. adults believe compensation for victims of workplace discrimination should be based on the severity of the harm inflicted. When workers experience discrimination, including harassment, they often experience significant emotional distress in addition to lost earnings and other financial harms. Setting one-size-fits-all limits on damages prevents workers from being fully compensated for the discrimination they have endured, even when a jury has found in their favor.  

An overwhelming majority of U.S. adults—regardless of political affiliation—also believe that employers should be held accountable when they engage in discrimination. Damage caps insulate employers from being held fully responsible for the harm they’ve inflicted, and as a result, employers are not adequately deterred from engaging in discrimination. Instead, employers, knowing that jury awards will be reduced by the caps, can shrug off discrimination judgments as a minor cost of doing business. And because the caps, which were set in 1991, are not adjusted for inflation and thus have not budged for well over 30 years, it is cheaper today for businesses to discriminate than it was a generation ago.  

Predetermined limits on damages in employment discrimination cases undermine accountability for employers and prevent workers from being compensated based on the harm they experienced. That’s why a majority of voters support removing these limits on the damages workers can receive.   

Bringing a lawsuit against an employer can be a long, difficult, and expensive process that compounds the harms of the discrimination or harassment itself. Davis and Wilson first brought their action in 2010. Although their lawsuit was ultimately successful, after seven years of fighting, and after a jury awarded them over $ 3 million apiece, they received only $50,000 each. 

Predetermined limits on damages not only undermine employers’ incentives to take steps to end discrimination and harassment, they can also deter workers from bringing these claims to enforce their rights and hold their employers accountable.  

Back in 2007, Senator Ted Kennedy introduced the Equal Remedies Act to remove these predetermined limits on damages in employment discrimination cases. But no action has been taken on this issue since. Now, it’s time for Congress to reintroduce and pass the Equal Remedies Act, to eliminate these damage caps once and for all. It shouldn’t be so cheap for employers to discriminate.